Comparing NetApp with the New EMC and Dell Technologies
A few years ago, I posted what turned out be a very popular blog that compared NetApp and EMC—two companies that have been battling for the hearts and minds of data storage buyers for years.
Now that the acquisition of EMC by Dell is final, this latest industry consolidation is sure to disrupt the thinking and buying habits of IT organizations around the world. So, in that light, I have updated the original comparison to include my take on Dell’s core philosophies alongside those of NetApp and EMC. I’ve also included some comments posted in response to the original blog—from a mix of staunch NetApp supporters, staunch EMC supporters, and others with a more agnostic view.
You Can't Change Your DNA - EMC Thinks Mainframe; Dell Thinks PC; NetApp Thinks Open Systems
EMC was born in 1979 and made a name designing memory boards for IBM mainframes. In 1990, EMC introduced the Symmetrix storage system for those same mainframes. As mainframe usage declined and open systems servers took their place, EMC transitioned the Symmetrix into an open storage system for Unix and Windows servers. Subsequent storage products from EMC—Clariion, Celerra, Centera, V-MAX, VNX and VNXe (now Unity), Isilon, and XtremIO—all carried the same enterprise design philosophy and catered to the same large customers.
Dell came to life in 1984 as PC’s Limited, a company Michael Dell started in order to sell customized PC’s to early enthusiasts via ads placed in computer hobbyist magazines. Over time, Dell expanded its product line, became a consumer-based online retailer, and perfected its delivery model to become the worldwide authority in supply-chain delivery. In 1994, Dell entered the business market with its PowerEdge servers, challenging the likes of Compaq, HP, and IBM and extending its low-cost, low-margin, but highly efficient business model.
NetApp appeared in 1992; about the same time that EMC was transitioning into open systems storage and Dell was moving into the x86 server market. NetApp started with a clean slate and designed a networked storage system tailored to UNIX and Windows applications. Using a stripped-down design approach, NetApp built an early base of loyal customers that appreciated the simplicity and efficiency of a purpose-built business storage system. Early NetApp advertisements often used the symbol of a toaster to underscore the simplicity, speed, and reliability of its storage appliances.
In my original post, several commenters took exception to my characterization of EMC. One commenter went so far as to say, “So what you see as a negative, many of us see as a positive.” My intention wasn’t to imply that one approach is necessarily better than another, simply that a company’s origins affect the overall corporate philosophy throughout the life of the company. That philosophy in turn may dictate the environments where a company’s products fit best—a point supported by this customer comment:
“I have been an HP, EMC, EqualLogic, Sun and now NetApp storage customer. NetApp is clearly the best choice for what I work with, which is highly virtualized open systems environments.”
EMC: A Different Tool for Each Job, NetApp: An Integrated Approach for Many Jobs, Dell: Sell the Cheapest Tool
EMC recognized that not everyone needed (or could afford) a Symmetrix-class product, and expanded its storage lineup over time by acquiring major storage product lines from Data General (1999), Data Domain (2009), Isilon (2010), and XtremIO (2012). As a result, EMC now supports five major storage platforms and operating systems (VMAX, Isilon, Data Domain, VNX (Unity) and XtremIO. EMC follows a siloed approach for data storage, where each storage platform is designed for specific workloads, and never the twain shall meet.
Dell embarked on a plan in 2011 to build its own storage brand, following the acquisitions of EqualLogic (2007) and Compellent (2011). Dell offers a variety of storage systems, including the NX and FS NAS appliances, the MD, PS, and SC SAN appliances, the DL family of backup appliances, and multiple server-attached (JBOD) storage racks. These products, like EMC’s, are siloed in nature and built with specific workload requirements or server-centric buyers in mind, but unlike EMC, are targeted at customers with limited budgets
NetApp has always placed high value on simple, modular designs - starting with the introduction of the original “toaster” appliance. Today, NetApp carries this vision forth with the Data Fabric, a software-defined approach to data management that enables businesses to connect disparate data management and storage resources and streamline data management between on-premises and cloud storage. Each NetApp storage system: whether NAS, SAN, or Object-based, is intended to coexist within this common framework that provides quick and easy movement of data from data centers to public clouds, and back.
While some commenters supported the approach of diverse product lines taken by EMC and Dell, many commenters to my original blog apparently saw value in the relative simplicity of the NetApp approach:
“Some of EMC's storage acquisitions created product overlay and redundancy between offerings. From a customer perspective, a lot of independent knowledge is required for each in order to manage all…NetApp seems to be making efficient business decisions by selecting products that broaden a like-portfolio without creating redundancy and overlay.”
EMC & Dell Believe in Growth via Broad-Based Acquisition; NetApp Believes in Growth via Internal Innovations and Targeted Acquisitions.
EMC has acquired more than 50 companies over the past 10 years; or roughly 1 acquisition every 75 days. As such, it is evident that EMC utilizes acquisition as its chief method in advancing product scope and competitiveness. In fact, it’s difficult to recall any product that EMC has developed wholly on its own in this century.
Dell has spent more than $15 billion buying over 30 companies since Michael Dell returned as CEO in 2007. In 2013, he took the company private in a $25 billion buyout deal. The “world’s largest startup” kicked off its new private life by announcing a $300 million Dell Ventures fund, which invests in early to growth-stage companies in emerging technology areas including storage, cloud computing, big data, next-generation data center, security and mobility.
NetApp has completed 13 acquisitions since 2000, a little less than one per year. With each of these acquisitions, there was a desire to strengthen the core business of enterprise storage arrays. Needed technology was picked up in these acquisitions, which helped further the impact of internal efforts that have driven the majority of NetApp’s revenue, innovation, and product competitiveness. One example: ONTAP, NetApp’s home-grown flagship data management software, has seen over 1,500 patent applications filed by NetApp between 1992 and 2013.
The topic of acquisitions was mentioned frequently in the comments to my original post.
One commenter noted:
While internal innovation is a great thing, there are simply too many smart people in the world to think that the only technology breakthroughs can be generated internally.
Our most recent acquisition, SolidFire, demonstrates that NetApp understands this. As one analyst noted:
“NetApp now has a solid entry leveraging this [scale-out] architecture in the primary storage arena — one that if intelligently managed should provide an excellent pivot point as NetApp evolves to meet future storage requirements over the next five years.”
Data Management Products are One of Many EMC and Dell Segements, but the Only Segment of NetApp.
EMC’s revenues are derived from its federated businesses which currently consist of: EMC Information Infrastructure, VMware Infrastructure, Pivotal and Virtustream. Data management products (within the Information Infrastructure segment) contribute less than 50% of EMC’s overall annual revenue.
Dell recorded $14.9B in revenue in its last public quarterly report, with enterprise storage revenue of $432M, a mere 3% of overall revenue. Although Dell positions itself as one of the largest integrated IT companies in the world, its data management product revenue trails all other integrated IT providers.
NetApp’s revenues are derived from a single source: enterprise data management software and systems. 100% of NetApp’s R&D spending is devoted to ensuring that organizations worldwide can continue to count on NetApp for industry-leading software, systems, and services to manage and store their data, whether on-premises or in the cloud.
The Dell-EMC acquisition may be complete, but the questions that arose when the deal was first announced remain. Customers and partners don’t have clarity or timetables on a whole host of fronts: Which overlapping products will be sold off, or terminated all together? What becomes of the EMC Federation? Can Dell effectively apply its supply chain capability to EMC, and how will this affect pricing? One thing is for certain – Dell will be under great pressure to service its enormous debt. Whether this will result in more sell-offs, charge-offs, and layoffs, remains to be seen.
The deal is now done, and we surely can expect new opinions to arise as this new entity tries to forge an identity in a rapidly changing IT world. Let me know what you think about this merger in the comments. How do you think the new EMC/Dell Technologies will affect your IT buying decisions?
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